the fine print

Beyond the Public Option: Four Questions You Need to Be Asking

On Wednesday night, Barack Obama at long last connected the cause of health-care reform to the grand themes that got him elected president: restoring a sense of mutual responsibility to American politics and of pragmatic civility to Washington. He probably didn’t win many new congressional votes for a public insurance option. But by reminding his “progressive friends” that a public option has always been just one means to the end of expanding affordable health coverage and making a strong case for his ultimate goals, Obama has emboldened liberals to pursue other provisions they care about. And, especially since the Senate Finance Committee will finally introduce its version of reform next week, that means the debate over health care is about to enter a new phase: haggling over policy details beyond the public option.

As reform legislation moves toward the floor of the House and Senate, and potentially from there to a conference committee that will craft a bill for Obama to sign, there are four key questions to watch. We’ll warn you in advance: They’re wonky. But how they are answered will determine not only whether reform gets enough votes to pass, but also what your health insurance will ultimately look like in the Age of Obamacare.

Will insurance companies really have to accept and keep all customers?
Every version of reform passed by Democratic-led congressional committees would ban insurers from denying coverage for preexisting health conditions, rescinding coverage for people who have insurance, or capping yearly or lifetime insurance benefits. These important consumer protections would bring massive changes to insurance companies, who either refused to cover or jacked up premiums for an incredible 36 percent of non-elderly Americans who tried to buy health insurance last year. So far, insurers have been willing to accept the new regulations because the reform bills would also require everyone to buy insurance, bringing millions of new customers to United Healthcare, CIGNA, et al. But watch this fall to see if their lobbyists try to water down these rules or carve out exceptions.
How much will insurance have to cover?
Insurance insiders evaluate coverage by its “percentage of actuarial value,” or the proportion of an average person’s medical costs that a policy will pay. Most group health plans are around 80 percent, and the Senate Health, Education, Labor and Pensions (HELP) bill would require all insurers to be at 75 percent or above. In contrast, Senate Finance Committee chairman Max Baucus (Democrat of Montana), following the lead of Senator Mike Enzi (Republican of Wyoming) and the insurance lobby, has come out for a minimum of 65 percent — meaning insurance companies would have to cover less than two-thirds of patients’ overall costs.
How much wiggle room will insurance companies have in setting prices?
If I’m a 59-year-old male smoker and you’re a healthy 23-year-old female, insurers are going to want to charge us different prices. That’s understandable, but allowing too much of a disparity will lead to huge bills for the people who most need insurance, and maybe drive them out of the market altogether. The Senate HELP and House bills would let insurance companies charge older customers up to twice as much as younger customers. Again, Baucus’s proposal is far friendlier to insurers: He would allow them to vary prices among policyholders by a ratio of up to 7.5 to 1, depending on their age, tobacco use, family composition, and geographic location.
How much help will people get to buy insurance?
The Senate HELP and House bills would provide subsidies to people earning up to 400 percent of the poverty line (which was $21,834 for a family of four, with two children, in 2008) to help them buy health insurance; Baucus is at 300 percent. This distinction is important to the overall cost of reform (more subsidies require more money), but also politically, because every version of reform would have real victims: people whose incomes are just above the subsidy level and who don’t have “minimally acceptable” insurance now, and who would either have to buy it without government help or pay a pretty stiff fine. One shrewd conservative has already asked, “Does the House really want to raise taxes on eight million uninsured people?” — and that number will shoot up if subsidies stop at the lower level.
Told you this would get wonky. But the odds that Obama will get everything he wants (including a public option) or that his plan will go down in Clintonian flames are both pretty low. It’s always been more likely that a somewhat muddled, Blue Dog–placating bill will pass, making reform’s details as important as the grand sweep of its narrative. It’s a good bet that we’re all going to have to buy private insurance and that we’ll get to keep it. It’s the fine print of reform that will determine whether that coverage is affordable and worthwhile or expensive and crappy.

Related: Anderson: Obama Averts a Spiritual Waterloo

Beyond the Public Option: Four Questions You Need to Be Asking